Mortgages - Help!

[seafoid]

The reckoning is it will level out at ~5.5%...

What if it doesn't? Markets have underestimated inflation since the start.

[Milltown Row2]

Had an interesting conversation with a fella about remortgaging in the current circumstances, he reckoned a lot of people will be extending their capital repayment (CR) mortgages over more years to ease affordability but what they should be doing is going interest only for the period you were prepared to extend it over anyway (for example) - rather than going from a 10 Yr to a 12 year CR mortgage, go for a 10 year interest only deal which is much cheaper and after 2 years you'll still have a 10 year mortgage. Seems a sensible approach but only if you reckon on there being 2 years lost payments anyway??? Am I missing something obvious?

Mate of mine has been interest only for about 10 years !! Its hard to come out off, as he's been used to the payments. He did it while kids were at college, he's one more left (she's one more year) and then he's going to try and get back on track..

I wasn't sure that interest only was available though as we thought about with the kids being away, but didnt bother..

I'd horse it on through if you can afford it. it can't stay that high for 3 or 4 years, can it?

He/she's s in for a shock!

They'll be grand but that's nothing to do with how they have done their mortgage, they've a couple of inheritance pay checks coming that'll square things but they have lost out I'd say potentially 

[RedHand88]

If the pound has got back to pre mini-budget levels, why won't mortgage rates move back accordingly?

Inflation still high, which I think is the main factor in setting mortgage rates.

[johnnycool]

If the pound has got back to pre mini-budget levels, why won't mortgage rates move back accordingly?

Inflation still high, which I think is the main factor in setting mortgage rates.

Wasn't helped by the BOE intervention to buy gilds as the pension funds were tanking due to the budget as much as the £ was.

Investors were evidently trying to get shot of anything UK based.

[nrico2006]

If the pound has got back to pre mini-budget levels, why won't mortgage rates move back accordingly?

Inflation still high, which I think is the main factor in setting mortgage rates.

But the sudden change in the mortgage landscape was related to the pound dropping as a consequence of the mini-budget, not the cost of living crisis.

[RedHand88]

If the pound has got back to pre mini-budget levels, why won't mortgage rates move back accordingly?

Inflation still high, which I think is the main factor in setting mortgage rates.

But the sudden change in the mortgage landscape was related to the pound dropping as a consequence of the mini-budget, not the cost of living crisis.

Fair point. Banks must be adapting a "wait and see" approach before reintroducing fixed rates.

[nrico2006]

If the pound has got back to pre mini-budget levels, why won't mortgage rates move back accordingly?

Inflation still high, which I think is the main factor in setting mortgage rates.

But the sudden change in the mortgage landscape was related to the pound dropping as a consequence of the mini-budget, not the cost of living crisis.

Fair point. Banks must be adapting a "wait and see" approach before reintroducing fixed rates.

Yep, which is understandable.  Hopefully the meeting today will help settle things towards normality again.

[Maroon Manc]

I see 2 year fixed rates above 6%, you'd have to be out of all other options to take a lender up on that offer.

I've seen talks of 5.5% been the new norm, don't see that happening for a 5 year period without having catastrophic consequences for the economy. Thats a lot of billions been spent on interest as opposed to feeding back into the economy, millions lost in various forms of tax.

[quit yo jibbajabba]

I think everyone knew they had to rise but its the speed which will and has caused problems. Youll have people coming out of deals in the 1s, low 2s now being faced with a deal say in the 5s as things stand. Carnage

[armaghniac]

If the pound has got back to pre mini-budget levels, why won't mortgage rates move back accordingly?

Inflation still high, which I think is the main factor in setting mortgage rates.

But the sudden change in the mortgage landscape was related to the pound dropping as a consequence of the mini-budget, not the cost of living crisis.

Fair point. Banks must be adapting a "wait and see" approach before reintroducing fixed rates.

Yep, which is understandable.  Hopefully the meeting today will help settle things towards normality again.

You have to remember that the ultra low interest rates of recent years has not been normal. I'm not saying that the 17% rates of the 1970s will come back, but between 2000-2007 the rates were 4-5%.

I see 2 year fixed rates above 6%, you'd have to be out of all other options to take a lender up on that offer.

I've seen talks of 5.5% been the new norm, don't see that happening for a 5 year period without having catastrophic consequences for the economy. Thats a lot of billions been spent on interest as opposed to feeding back into the economy, millions lost in various forms of tax.

For every borrower there is a saver, no money is "lost".

[Fear Bun Na Sceilpe]

Im currently on 1.23%. Ahhhhhhhh. Changing in August

[imtommygunn]

I think everyone knew they had to rise but its the speed which will and has caused problems. Youll have people coming out of deals in the 1s, low 2s now being faced with a deal say in the 5s as things stand. Carnage

Yeah exactly. You get idiots saying it was worse than this in the 80s. The affordability of housing was completely different and your LTV etc etc and this has been a sharp sharp rise.

They did this in a day and quite frankly probably fully intentionally because despite how they look they are not idiots.

[RedHand88]

Im currently on 1.23%. Ahhhhhhhh. Changing in August

Start saving now.

[Maroon Manc]

If the pound has got back to pre mini-budget levels, why won't mortgage rates move back accordingly?

Inflation still high, which I think is the main factor in setting mortgage rates.

But the sudden change in the mortgage landscape was related to the pound dropping as a consequence of the mini-budget, not the cost of living crisis.

Fair point. Banks must be adapting a "wait and see" approach before reintroducing fixed rates.

Yep, which is understandable.  Hopefully the meeting today will help settle things towards normality again.

You have to remember that the ultra low interest rates of recent years has not been normal. I'm not saying that the 17% rates of the 1970s will come back, but between 2000-2007 the rates were 4-5%.

I see 2 year fixed rates above 6%, you'd have to be out of all other options to take a lender up on that offer.

I've seen talks of 5.5% been the new norm, don't see that happening for a 5 year period without having catastrophic consequences for the economy. Thats a lot of billions been spent on interest as opposed to feeding back into the economy, millions lost in various forms of tax.

For every borrower there is a saver, no money is "lost".

Average house price to average income ratio is as high as it ever been, interest rates of circa 5% will cause chaos.

The average mortgage is £138,000, a 3.5% rise on that is about £400 a month. Thats going to have a huge knock-on affect on disposable incomes and therefore growth in the economy.

[clarshack]

I think everyone knew they had to rise but its the speed which will and has caused problems. Youll have people coming out of deals in the 1s, low 2s now being faced with a deal say in the 5s as things stand. Carnage

Yeah exactly. You get idiots saying it was worse than this in the 80s. The affordability of housing was completely different and your LTV etc etc and this has been a sharp sharp rise.

They did this in a day and quite frankly probably fully intentionally because despite how they look they are not idiots.

I've seen people saying that 15% interest rates back in the 80's/early 90's is the equivalent of it only going to 6% at present.