We've just had to re-fix ours and I wish I'd done it 6 months ago....
We've gone from 1.89% to 3.81% from last 5 year fix to this one.
Some articles paywalled, but you get the gist.
https://www.thetimes.co.uk/article/p...ages-g2g52xgc6
https://www.telegraph.co.uk/personal...rise-30-years/
https://www.standard.co.uk/business/...-b1027417.html
If you renewal is coming up next year, you may want to explore fixing now, and taking the exit penalty if it financially makes sense.
5 year Govt bonds now 4.4%. Up from 1.7% just 7 weeks ago.
The markets are doing the BoEs job for them.
Expect 6% 5 year fixed rates soon.
If you currently have a fixed rate re-mortgage offer in the 3.5% range, hold onto it for dear life.
The rate increases together with the energy increases could make this a very uncomfortable winter for many.
Just had a call today informing me that my remortgage has been pulled at the last minute by the bank. Interestingly they had been delaying for a while on the valuation and I have been badgering them for some time to see what is happening. Clearly they want to squeeze more money out of everyone and so have pulled what was a relatively good offer (3.5%) and will doubtless offer the same pot to someone else at 5% or more. I won't remortgage at that rate as I don't need to, but I pity all those that have had their dream pulled from under their feet today.
Sadly all this is rather predictable given the idiotic announcement last week from the current Chancellor. When Sunak kept saying that this was the wrong thing to do, it didn't seem to go down at all well with the WI that elect Tory leaders and it cost him the top job, but he clearly had a point!
Sorry, just realised that I might have transgressed the 'no politics' rule...
Sort of difficult to separate the mortgage issues from politics at the moment. I wouldn't worry, facts is facts.Originally Posted by ant8519
Yeah, more worrying is my clumsy mixed metaphor of having your dreams pulled out from under your feet, I mean, what are they doing down there?!
So your application is in at an agreed rate and they can pull? I thought I’d secured 3.49%…. That’s a little worrying
Nice one spuds - balanced offspring and more secure future. Enjoy
I imagine that the fee hadn't been paid, and the rate was not locked.
I'm dreading it. I'm on 2.24% fixed until July next year, and I can see it being triple that by the time I can do anything about it.
You can exit early and pay a penalty. Might be worth it in the long term.
I went through a broker. The deal was fee free which might have been an issue. I will only deal with a bank directly in future, I used a broker as I was a bit time pressed and I thought it might be quicker. I have only remortgaged twice in my life so I am not very savvy. I had a decent low rate fix which I paid off in full and a tracker at bbr plus 0.25 percent which had me laughing my socks off for years before it was finally paid off. I was remortgaging to raise money for an investment so I am cheesed off, but not emotionally impacted in the same way I would be if I were trying to buy a home or secure the one I was in. Still, Kwarteng apparently reported to have said "So what if the pound falls it will rise again". Casinomics at its very worst.
You can lock in and pay for a new rate in Feb based on July.
As mentioned it might be worth getting a redemption quote and doing the sums of exiting early if the math adds up.
Glad to hear you’ve got it sorted Spuds.
We fixed for 10 years at < 2% in th run up to last election as it was all too obvious that Brexit was going to be a disaster.
If mortgage rates go up to 5 or 6% as widely predicted since the mini budget, a lot of people are going to really feel the squeeze of mortgage payments increasing.
Many on here will recall the time when mortgage rates were in high teens, but the actual loan figures were far lower. You could buy a property for just over 3x salary or 4x if lender prepared to include Wife’s earnings too.
Not much you can afford now for 3x average salary now.
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Last edited by Fifer; 29th September 2022 at 12:35.
I thoroughly recommend L&C (London & Country) mortgage brokers, I've used them for my past 4 remortgages (across 2 properties). I'm glad I tied in at 1.1% for 7 years last December.
Last edited by jukeboxs; 29th September 2022 at 13:16. Reason: typo
I spoke to my Mortgage Advisor yesterday as I'm very close to exchange. For what it's worth, he doesn't see a catastrophic shift in house prices and he sees and turmoil as being short lived and that we should be out of it once my renewal comes up in 5 years time. He said the media are miss reporting / public misinterpreting what lenders are doing. They are only pulling products for potential new customers. Anyone with an existing mortgage offer is being honoured.
I had a proper wobble about proceeding as I have a btl at 75% ltv so super interest rates could make it uneconomical to keep in 5 years time but he calmed my nerves.
There are very few pluses about being old but one is (if your lucky) no mortgage, I run a 11 year old car so no remortgages for fancy cars either.
When the interest went up into the mid teens I had a mortgage 6 times salary, it crippled me for a long time and took a long while to recover from.
People have all these fancy and clever ideas but I always say if you can pay your mortgage off pay it off but like I say i'm old and old fashioned.
All paid now but I recall taking a fixed for 9.5% 😱
Presumably he/she gets a fee or kickback once you complete. If so, they can never give you truly independent advice.
Not saying their advice is bad, but they have a vested interest.
I'm with you, high leverage is great in a rising market, especially if you have non-recourse finance. But you've always got to stress test your finances to makes sure you can stay in the game under the most extreme conditions, there is calm attached to wholly owning your main residence even if it does mean you might have foregone some upside by not playing the leverage game.
I feel desperately sorry for those facing financial hardship, but sadly it was inevitable cheap deals would end, albeit the landing has been harder. Also illustrates the power of taking a fix on anything if the penalty is sensible. Extends to energy too, a 2 year fix about a year ago had the equivalent of about 3 weeks penalty for early termination, that's a cheap hedge.
3.49% felt like a reasonable deal within 2 weeks!
So, to conclude, I did fix for 7 years and the deal completed this week…. 3.49% v my previous 1.89% is hardly desirable, but in comparison to 5.49% I’d get now it feels great…
Thanks to all on here for your insights and special mention to Devonian who I caught up with outside this thread…. What a lovely bloke!
Got 13 years left on our mortgage and fixed, for 10 years, at 3.29% a few months ago. LTV sits at just over 35% and mortgage payment is 20% of combined take home pay for my wife and I. All in all I’m happy with that.
We will be overpaying during the 10 years to bring it to an end by the end of the fixed rate.
Why would you overpay, when you can get a better savings rate than your mortgage is costing you?
We will be, not we are. We will overpay when the situation suits.
Is anyone offering over 3.29% interest for an unlimited sum for more than 3 years at present?
My 5 year fix comes to an end in May 2023, currently paying 2.29%, svr is looking like 5.5% at present. Unless i cant get a short term fix at less than 5.5% i might stick with the svr (dont really have a choice) until things get better.
Yes virtually everyone. So typical offers on fixed rate savings bonds are 4.5% for 1 then 4.8% for 2+
Same thinking. 5 year fix @ 1.8 ends in May.
Why stay on SVR when you can get a cheaper tracker? The SVR will still follow-ish the BoE rate.
Typical trackers are just over 3%
I’m in the same boat. Our 5 year fix at 1.89% ends in August.
I’m thinking/hoping that by then, inflation will have peaked, the war may have found a resolution and rates may even have started to be reduced again as CPI/RPI could plummet under the right conditions.
Tracker all the way. They will probably still be cheaper than a fix.
Tricky times.
We will almost certainly have started seeing heavy competition between the lenders again by then, as they’ll all be struggling to bring in enough new business.
Funny thing is, when BOE base rate was 0.5% and less, there were lots of deals available at around 1.5% over base. But now base is higher, all the deals are about 2-3% over base. What’s that all about??
Back in the 90s and 00s when interest rates were 5%, there were lots of discounted rates, where you’d take a loan out for 2/3/5 years at 1-2% UNDER the BofE base rate……I expect those kinds of deals will start coming back soon enough.
The deals are so much more over base because the banks expect the rates to rise further and want to cushion themselves against potential losses from tying themselves into providing fixed loans that could be below base rate within the next 6 months.
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Not quite sure that’s how it works. I believe it is more related to the gilt bond yields which rose sharply. Meaning the relevant swap rates were impacted. It is these mechanisms that influence the rate a lender charges on a mortgage.
I find have a massive capital debt stressful so overpay to give me more freedom if my income changes. Thoughts?
Agreed, I was always raised to save and buy and avoid loans so a mortgage is a stress as it is and would rather have the peace of mind that if I lost my job the house is paid.
Well, you would also have a capital surplus built up from savings which to draw from if your income changes.
If the savings rate is better than the mortgage rate then you are better off saving than paying off the mortgage.
But I get the sentiment, and may be it is the best thing for you if paying off the mortgage is worth something emotionally to you if not financially as worthwhile
I read over on the MSE forums a few days ago that mortgage rates have actually come down since the BOE interest rate rise on Thursday. That's how much the Truss mini budget spooked the markets.
Surely a rise in the bond yields is beneficial to the banks, if they have invested in such?
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Logically, this makes no sense. You have the money either way, regardless of if you put it into your house or a savings account, so income/job change is irrelevant.
If the mortgage interest is higher than the available savings rate, then you may be best to overpay the mortgage. But if the savings rate is higher than the mortgage rate, why trade in flexibility just so you can lose money?
Yes. But the point is that the bonds are in theory less risky than lending to mortgage holders as they are government bonds. So if bond rates are higher it will take a higher mortgage rate for the banks to divert funds from the bond investment to consumer mortgages. Hence the intrinsic link between government bonds and fixed rate mortgages.
For me there is a financial side and a subjective side. I like the idea of paying the mortgage off, it's the sense of achievement which outweighs the interest earned especially after a rubbish day in work.
Financially it's not that clear cut in terms of interest rates. You have to look at the duration left as well, if you have many years left you'll be saving money in the good times and bad times.
Making me happy in my heart outweighs everything.
A good explanation of how rates and gilts are interlinked:
https://www.moneysavingexpert.com/ne...-you-need-to-/
Jake
I can't speak to the emotional aspect, but from a financial perspective it remains an illogical position. If you keep your savings in the bank earning more money than the mortgage costs, you have the flexibility to pay that money off the mortgage down the road if the rate situation changes in an unfavourable way. That's the benefit of flexibility and you'd still be better off financially.
I get your point but have the bond rates risen by more than the base interest rates? I still think the market projection is playing a part. The trend and trajectory seems to suggest they are expecting further base rate rises. But no doubt they expect further bond yield rises. Both factors would influence them to set borrowers rates at a higher level and gap from base rate than before.
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That’s true using logic - as long as mortgage interest rates are lower than the return you can get on savings rates. Using the same logic someone should take out say a 20 year mortgage instead of say a 15 year mortgage, or a 35 year mortgage instead of a 25 year mortgage and using the difference saved in the monthly payments to build up savings at a higher rate elsewhere. Taking it further everyone on that basis would be better off having an interest only mortgage and making far more. Going even further still, we should all take out an interest free credit card with a 2% fee for a year as long as we can get 3%. Lots of ways out there to play the system.
So logically you’re right.
There’s a reason though lenders (and the FCA] don’t like interest only mortgages and that’s because people don’t pay them off. They don’t build up the savings elsewhere to repay the mortgage years later (like they declared they would on the application form) and then they are stuck with a large mortgage. Hence why after the credit crunch in 07/08, interest only mortgages all but disappeared. Yes they are still out there but with a lot of restrictions (such as a huge percentage of equity in the property).
Similar with people using extra savings to build up funds elsewhere - many people don’t have the discipline. They will dip into that pot to buy a new dishwasher, weekend away, summer holiday, new shed etc etc. If they had over paid on the mortgage they would economise and find the money elsewhere. When it’s sitting in an account, it’s easy to not be disciplined. Probably why pension pots can’t be accessed until later life - people would be cashing it in for all sorts of reasons and there wouldn’t be anything for retirement.
So as I said logically you’re right and for some people, it’s the way to go. For many over paying is simpler, offers less temptation and gives peace of mind.
Think there's a pretty drastic difference between the situation discussed and the examples you've given. Not least because it's very hard to imagine rates staying inverted for any serious amount of time.
But yes it seems we agree on the basic premise. As for people making bad choices, well yes people can make bad choices about pretty much anything.
BUT surely tax should be taken into account...
Agreed. I think the threshold is £1000, over that it get taxed at your income tax rate (i think).
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