So, Interest Rates and Mortgages - how's everyone looking?

We moved in August 2018 and made the decision at the time that rates would go up at some point in the future so locked in for 10 years at 2.49%. Remaining balance in 5 years should be a four figure sum.

It would be nice to see interests rates at a decent level. My savings are slowly being eroded.

We fixed for 5 years last September *just* before it all kicked off. Paying £200 a month more than we were just because rates had started to rise slightly but that, coupled with energy costs increasing and general inflation is leaving us having to find about £600 a month more than last summer but we're just about managing. Fortunately, we have a relatively low LTV so if the shit really hit the fan, we could downsize. I am hoping to be in a position to pay off the remainder of the mortgage in full when we come out of this deal – we'll see.

Perfect storm at the moment. Those who talk about the 15% at the tail end of the 80s do not mention that house prices were 4x average wage. It's now 11, down south.
Saying that I renewed last year at 1.5% as I sort of knew this was coming and told my broker so. My aim is to pay off as much as I can in the next 4 years... hopefully.

Hmmm, unless I have missed something drastic I think we are OK.
We have 2 mortgages on our house - basically about the same amount left on both of them.
One is 0.95% above the base rate, the other is fixed until 2030 - I lucked out & fixed for 10 years in 2020 - that's at just under 2.5%.
The non-fixed on only goes up by about £5 every time there's an interest rate tweak, so rates would have to be stratospheric before it becomes an issue.

When we bought this house, we worked out what we could afford based on one of us being out of work. Even then, we kept it pretty sensible. House prices where we are, are fairly sensible too.
At the time it seemed a bit boring and I do sometimes wish I had a slightly riskier attitude to money, but currently feeling quite happy about our choices. Apart from the mortgage, we have no debt - both cars are owned by us & paid off etc.

We are currently planning a modest extension, which will also incorporate re-decorating the entire hall, stairs & landing (including new staircase, doors etc. not just a lick of paint). We'll need to re-mortgage to do that, but I am not sure what that means & whether we will proceed with it once we have a cost & speak to the bank about how much it will cost.

While I have sympathy for most people's circumstances, I do know some people who have clearly thrown caution to the wind and bought expensive properties with no calculation of what a change in circumstances will mean. I struggle to feel too much sympathy for them.

Should have fixed last year when I was told to. Fairly small mortgage so it's gone from £650-750ish, but offset by my childcare bills dropping to less than half and moving jobs for a step up the ladder and associated bump.

Our previous rate ended around Sept/Oct last year when it was just all kicking off.  Managed to fix at 3.3% for 7 years which I initially regretted, thinking I should have taken the 3% for 5 years.

I've just panic fixed for 2years.  Dreading the next 48months, the last 48 have been shite but now may lose my home on top of some crap family issues and a divorce.  Divorce to be settled and the market will decide on whether I can remain in my home which has been an absolute shelter for me mentally in recent times.

Absolutely pissed off with it all.  Luckily I have a mountain bike to reign in the tough times...

Currently bidding as a FTB to move to NI after x years away. Since last week, one of our offers on a house keeps getting countered. Now sitting +17k above the original on a 3-bed semi. The other we are bidding on has gone up +13k. Starting to hit the limit of stopping. A lot of people moving across it seems.

All talk of the market slowing down, but it feels like madness at the moment. Not too worried about interest rates as a hike is in our affordability and everyone else will somewhat be subject to it. It's more actually winning a bid at the moment that's hard for us 🤷‍♂️

While I have sympathy for most people’s circumstances, I do know some people who have clearly thrown caution to the wind and bought expensive properties with no calculation of what a change in circumstances will mean. I struggle to feel too much sympathy for them.

Well not everybody is financially literate. They just want somewhere secure to bring up their families and rightly or wrongly trust that the financial system wouldn’t recklessly lend them more than they can afford to pay back.

When we got a mortgage, we were paying a fair amount of interest back in the 90's and had factored into the 'affordability' if it would hit 12%.

We've been mortgage free for a few years, finished ours before we were 50. Not a large mortgage by any means, and we're still in the original house.

^ the banks will have checked their ability to pay back at 6% rates anyway, so they'll be able to afford the mortgage (assuming they didn't lie), just have to tighten their belts elsewhere. A lot of folks are in the position where they can lengthen their mortgages as they remortgage to reduce the payments down a bit, and hope the debt inflates away.

I'm part of the 70% of the country who doesn't have a mortgage, which lends weight to the argument that interest rates are a fairly blunt tool (as they only really affect 30% of us)

While I have sympathy for most people’s circumstances, I do know some people who have clearly thrown caution to the wind and bought expensive properties with no calculation of what a change in circumstances will mean. I struggle to feel too much sympathy for them.

See my comment on the other thread. There is no reason why the UK mortgage market should be so sensitive to fluctuations in interest rates and markets. Expecting people to be able to predict the future and weigh up all the economic movements and risks is ridiculous. You're blaming people for not being able to predict the future.

(as they only really affect 30% of us)

They’ll affect renters too unless an unusually generous landlord doesn’t pass on the increase

^ the banks will have checked their ability to pay back at 6% rates anyway, so they’ll be able to afford the mortgage (assuming they didn’t lie),

Not necessarily. Banks weren’t obliged to run the same stress test on loans fixed for over 5 years. My previous fixed term ran for 61 months.

we're 1 year into a 5 year fixed on a BIIIG mortgage (big house in Hove.. blended family = too many kids!!).. fixed at 1.19 ish %...

Would be another few K on our mortgage  per month at today's rate.. eek~! Should have fixed for 10 years!!!

DrP

In the shit and dreading what is still to come. Paying 2.25% over BofE with no possibility of remortgaging. My payments have gone from £330 to just shy of £1k. I currently have some equity, but almost certainly can't actually afford to downsize.

With only 4 years to go I am currently riding it out on a variable. I am hoping things will be lower in 18-24months (euro zone here). Looked a fixing but the savings would be swallowed up in fees etc so decided to sit it out. If I am wrong and rates don't come down in next year or so then I would only have 2years left so should be OK. To be honest the gas/electricity rises have hit me harder. My sister, in London, on the other hand....oooff

Got two years left of a five year fix at 1.7%

Only problem is we want to move and borrow more, which is far more expensive.

robola

Well not everybody is financially literate. They just want somewhere secure to bring up their families

The people I was specifically thinking of when I wrote this are young couples, no 'families' to bring up other than themselves, working in degree level jobs where a strong grasp of maths & risk assessment is required.

As I said - I do have sympathy for most people who are finding themselves in a tight spot now, but there are others who knew full well what they were doing & decided to proceed anyway.

dazh

Expecting people to be able to predict the future and weigh up all the economic movements and risks is ridiculous. You’re blaming people for not being able to predict the future.

Predict the future - erm, not really.
I would expect people making such a large financial investment and potentially loading themselves up with a massive financial burden for the next 25/30 years to do some due diligence on whether the can actually afford it should the situation change.
We have gone through a long period of the lowest interest rates in history. It doesn't take Mystic Meg to foresee that at some point those rates are going to go up. They couldn't go down any further, so the only option would be up at some point - maybe tomorrow, maybe in 30 years.

I am not a financial whizz, but had the foresight 12 years ago when we bought this house to do it well within our means.
I know there are some people who need to spend more of their outgoings on their mortgage than I have had to, just to put a roof over their head. These are not the people I was referring to.
I was referring to the people who looked at the low interest rates & decided it would be a good idea to max out their spending power to buy a massive house way beyond their needs, which has given them no headroom now things have inevitably changed. They basically loaded the dice on interest rates not going up.

I’m part of the 70% of the country who doesn’t have a mortgage, which lends weight to the argument that interest rates are a fairly blunt tool (as they only really affect 30% of us)

Only around 28% of occupants are debt-free

They’ll affect renters too unless an unusually generous landlord doesn’t pass on the increase

^^ You have to also factor in this – and it's these unfortunate people that are likely to struggle the most when landlords start increasing rents to cover their increased costs. Ie, landlord has a 10% increase in costs, they stick up rent by 20% just in case.

I made some mistakes in the early 2000's and my last remortgage was a desperate attempt to save my failing business. Since then I've been bankrupt and made redundant 3 times with the last resulting in a 30% drop in wages that weren't by any stretch of the imagination high in the first place.

we’re 1 year into a 5 year fixed on a BIIIG mortgage (big house in Hove.. blended family = too many kids!!).. fixed at 1.19 ish %…

Would be another few K on our mortgage per month at today’s rate.. eek~! Should have fixed for 10 years!!!

DrP

We also fixed on 5 years and are about three years in. My wife wanted to fix for 10 but I (regrettably) said that was a bad idea. The next couple of years will dictate to what extent I will be blamed for a drop in our disposable income when the fix ends.

They just want somewhere secure to bring up their families and rightly or wrongly trust that the financial system wouldn’t recklessly lend them more than they can afford to pay back.

theres a big difference between can't afford; and expecting monthly payments to never go up.

my prediction - increased term lengths, possibly taking people beyond retirement age

Giving people the options of either work longer; downsize to release equity; or die before paying it off.

At which point its pretty much renting from the bank, but with extra steps.

Mortgages - thankfully mortgage free now. But only ever had a small mortgage (sub 100k).

Interest Rates - our car PCP ends in Sept. We'll be paying off the balloon from savings as it's now a perfect storm of high used car prices (we usually by a two year old vehicle and keep it x3 years) and high interest rates.

Which means paying off the balloon is the best choice and then we plan on putting the money we were spending on finance back into the bank over the next two years and see where things are then.

Would be another few K on our mortgage per month at today’s rate.. eek~!

What really?
A few k more per month!
What did you buy, Eastbourne?

Mine goes up about £1k/mth next month. Not comfortable but riding it out until they drop ( a bit!)

With no financial skill whatsoever, we took out a 10yr fixed in 2021. Nice to win for a change after many years of not reaping the rewards of very low interest rates due to having fixed mortgages.

Guess it all nets out in the end. Have always been cautious so fixed was always the way for me.

Fixed in 2021 for 5 years. Not looking forward to whatever it is in 2026. We'd be ok at 6%. If it's up at 10% then i'd have to do some serious belt tightening!  Not like the 90s when the average house was 4 x average salary!

One of the key things people who moan that people who got a big mortgage is that to get any house in the SE big enough to raise a family on even a fairly decent wage will require a big mortgage (unless you get a inheritance). As a case in point - I'm an early millennial, I bought our last house (small 3 bed) in 2012 for 310k, I sold it in 2021 for 500k. The salary for my job in 2012 had barely moved in that time. Apparently our new house has now increased by 125k since 2021 (tho I expect this will be reversed in the next couple of years) - we briefly had to consider moving a few months ago so got it valued.

whilst landlords might try to stick rent up, overall rent pricing is supply/demand based, not cost-based. Some may choose to bail out if there's no way to make it work affordably (no bad thing), which will be exaccerbated by the minimal rent cover requirements on btl mortgages (and you can't lie on those forms, the banks will check local rent rates).

only 30% of homes are owned with a mortgage, the rest are rented in some form or owned outright.

We were mortgage hunting last year when Liz & Kwasi decided to play funtimes with the economy. We are VERY fortunate to have decent income and a bit of equity from our previous home but even then it was rough going. We had an offer accepted on a wonderful house but had to reign in my optimism and withdraw. I don't regret getting a smaller house (less hoovering) but can absolutely sympathise with folk who didn't quite see all of this coming - particularly those coming out of longer fixed deals.

I fixed for full term a few years back I was paying over the odds but now I'm quids in , too many people seem to have mortgaged up to the eye balls expecting the rates to be low for ever

For what it’s worth I didn’t max out 5 years ago when I bought my current house and although the rise when we go onto a new deal will be painful it is manageable.

theres a big difference between can’t afford; and expecting monthly payments to never go up.

Agreed, but an awful lot has happened in the previous five years that may have slightly impacted people’s financial planning. While a lot of people were at home tossing it off on furlough some people completely lost their income and haven’t actually recovered. They may have been planning to reduce their capital during this period of low rates in the knowledge that rates would likely rise.

The lack of empathy from people who got lucky/financial geniuses is heart warming.

Congratulations to everyone who has something fixed for the rest of the decade, or even just for the next few years. You all win. Ours reverts to SVR next year, and I can't see any easy way to escape that right now. Due to illness our household income has dropped a lot since we got our current fixed deal... hunting for a new offer this winter looks like a tough ask.

We also fixed on 5 years and are about three years in. My wife wanted to fix for 10 but I (regrettably) said that was a bad idea. The next couple of years will dictate to what extent I will be blamed for a drop in our disposable income when the fix ends

I can answer that...you will 100% be blamed... 😉

What did you buy, Eastbourne?

ha!!! Nah... Me and the OH bought a place in Hove a year ago, as bringing together her 2 kids and my 2 kids...
It's an expensive place, but as it's a weird set up (kinda like 2 houses merged together) and it's massive and suits our needs, and in terms of £/square foot it's 'good value'.  Will see what impact we can have on the LTV when it comes to remortgaging...

DrP

stumpy01
am not a financial whizz, but had the foresight 12 years ago when we bought this house to do it well within our means.

lol so did i, but i failed to also account for my electricity cost tripling, food increasing by 50%, house insurance up 30%, car insurance up 20%, water up X%, council tax up Y% etc all at the same time.

.

You’re blaming people for not being able to predict the future.

Not really, you're asking people to take a best guess on a 5-10 year view on their personal affordability. No one has needed Nostradamus-a-like powers so far in the history of people taking loans to buy a property. I doubt they really do now ether.

Been mortgage free for 8 years, but having cashed-out and down-sized the interest on savings until recently have been derisory, the Truss-Kwasi effect on my pension means that’s decreased/flat-lined whilst all other expenses have increased.  I still think there’s a few more bumps in the road for the UK economy until we see the return of a sensible government that encourages the right kind of investment that will increase productivity and GDP.

Fixed at 1.03% for 5 years back in March 2022, so hoping that the next 3.5 years lead to things calming down a bit. In the meanwhile hoping to save and/or overpay as much as possible so as to lessen the remortgaging impact when it comes. With the benefit of hindsight it would have been the perfect moment to fix for 10 years, but there we go.

Chucking my details into a mortgage calculator, it looks like a 4.5% mortgage would be adding about £600 a month to our outgoings. On top of this even with our best efforts our mortgage is unlikely to be below 5 figures before the fix expires. Small mercies though as by this point we'll be coming to the end of nursery fees so we'll just spend that money on the mortgage instead!

I'm an early millennial and for basically my entire adult life rates have been low. This is obviously an aberration when looked at over a broader timescale, but when your entire life experience is that mortgages are cheap and houses are expensive you can I think start to see why people have borrowed enough to start coming unstuck when all of a sudden everything starts going up except your salary.

We're moving in the next few weeks. Decided to go ahead with it just after the debacle that was the mini budget. The good news is that we can port our existing mortgage over on the silly low fixed rate we set a while back.

The second part of the mortgage was negotiated at the start of Dec but was only valid for 6 months. We reapplied about 4 weeks ago before rates rose again and got it at a lower rate than Dec. So in summary we chose a crap time to move, but it could be worse.

We are ok at the moment, but borrowed a further 100k to refurbish  the house, which is now mostly spent.  I've had to do a lot of the remaining work myself to save money (trades are £££ and hard to get them to turn up...)

Could have fixed for 10years at 1.5% fixed for 5 at 1.09%  Budgeted worse case was 7% based on historic rates and what was on offer.

Didn't not factor in all other costs going through the roof, just a nominal amount of inflation

Have 12 months before it really hits us, not sure if we can cut back as much as is needed have withheld the final amount of refurb money as a reserve - garden will have to be done by me too and on a budget.  May need one or both of us to push for promotion or take on a second job

And.... rates could have gone lower, japan and some Scandinavian countries are examples.  I actually thought that might have been a possibility and factored into my decision not to take a 10yr.  Stupid boy

How are we doing? Smug and hoping to pay things down asap.

We re-mortgaged nearly two years ago - and fixed at 1.19% for 5 years.
We are also fortunate enough to be able to overpay each month, and for reasons also have 40% of our outstanding mortgage balance in savings. So at present I could do with better interest rates and more stable returns on my S&S ISA's.
In August 2026 when we come off this fixed deal, we hope to only have a year or two of mortgage to go - if our ISA's had done better we would be looking at paying everything off. I hope we may be able to just take a loan out, not a mortgage in 2026.

got 3yrs left on a 5yr deal at 1.9% - aim is to pay off the 15 year term full balance in those 3yrs - ball cocks to paying silly high interest rates. Only reason houses are so expensive is due to years of super low interest rates and mega cheap borrowing. Yet the banks cant let the prices crash now they are less afordable can they?