Reply With QuoteI'd agree with this. I think base rate won't go over 3% though.Originally Posted by mr noble
The housing market really does need a reset though.
And building work is hardly cheap at the moment!
I'd agree with this. I think base rate won't go over 3% though.
The housing market really does need a reset though.
Just based purely on affordability, typically a 1% increase/decrease in interest rates translates to a 10% increase/decrease in house prices.
That ignores employment, sentiment and other factors.
So, 3% interest rates coupled with negative sentiment can have a significant impact on the housing market. Trees do not grow to the sky.
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Exactly the situation we are in, partners mortgage was part interest only and the broker has worked out a way of bringing all parts of the mortgage including the added amount of us moving to a bigger property into a single repayment product in 2 years time, it’s complicated and will mean a couple of months on standard rate while all the products come to an end and we consolidate. the high exit fee”s mean it’s better to do it this way.
this move wasn’t really planned and mortgage had been fixed not many months before, it might have been cheaper to let the previous one run onto the standard rate but nobody has a crystal ball.
At least mine has over 3 years of a 5year fixed to run while i rent it out and decide what to do with it near the end of that deal.
Where do they grow to then?
Been trying to sort mortgage out for the last week in between hectic work schedule. Lots of lenders pulling products recently. Best rate I managed on a 5 year fixed was 3.25% with Coventry.
Starting to see a number of properties down this way go from "opportune" pricing to something more sensible, 10% reductions over 3 months in several cases. I suspect it will just encourage less to bring houses to the market unless there is a need to move, let's see.
Now I really wish I had fixed for 10 years when I took out my mortgage 18 months ago. 5yr fixed at 1.43%. Halifax.
What’s the LTV?
45%
Rates definitely on the rise then by the sounds of it! I’m not due to remortgage until March 25, who knows what rates will be then!
I just missed out on 3.08% that was pulled at 5pm yesterday by the lender. Advice was to lock in now.
To be fair, our first 5 year fixed on this place when we bought in 2012 was 4.64%…currently we’re in our 2nd 5 year fix at 1.61% I think!
That is a jump...i got 1.19% last November with HSBC for 5 years...i am overpaying every month as i dread to think the rates in another 4 years.
I fixed for 5 years just a few months ago at 2.12% which I was pretty happy. Same provider now with same circumstances would only offer 3.3% now when I looked a few days ago though I did read that rates are actually coming back down again a bit?!
Back in 89 our first mortgage was 10%
But on the other hand it was a 3 bed house in SW16 for less than 60K, so it's swings and roundabouts
....... Wouldn't you be better off investing the extra at which you point you will most certainly have made more than the difference than the increase in the interest rates at that point?
Why in the hell would anybody overpay when they're borrowing money at 1.19%????? It's literally free (after inflation)
To get the capital owed down so that less is owed at renewal time. That's certainty what I'll be doing (after I've built my reserve fund back up).
Strange style…………
Don’t you have to pay tax on your investment interest/dividends - does that not swing it heavily in favour of excess mortgage payments?
Life insurance cover premiums for your outstanding mortgage can also be reduced pro-rata.
Not if saving it in an ISA wrapper. I think returns on a stocks and shares ISA would greatly exceed 1.19%, so when he comes to remortgage he can offset the savings amount and take a lower mortgage sum.
Sold a property for market value of £170k in 2012.
It sold again this year for £270k with no improvements.
Started out with nothing. Still have most of it left.
Would they exceed 3.25% though? I'll happily pay into a S&S Isa if it's going to outperform my mortgage rate.
Quick update, both my house (I'm taking equity out and turning it into a buy to let) and the house I'm buying have been valued at less than expected (9.5% less for my house and 5.5% less for the house I'm buying). The Mortgage Advisor and the EA both agreed that lenders are spooked and are down valuing everything in anticipation of a recession. The loan to value on the new house is low enough for this not to be a problem for me but I will be taking the opportunity to see if the vendors will reduce the sale price.
The same reason you don't take money out on a credit card to invest - risk.
Credits card interest rates are considerably higher than mortgage rates so the risk would be much higher of not beating the rate.
Most would agree that it’s better to invest than pay the mortgage down but there is still an element of risk.
If you choose to pay the mortgage down the outcome is guaranteed. Not so with investment.
It is swings and roundabouts, those figures back in the late 80’s have little correlation to todays living standards and house prices, I think an equivalent IR today would be around 5% due to mortgage sizes and other borrowing lots of families have like car PCP, personal loans etc which were not so prevalent back in the late 80’s..Back in 89 our first mortgage was 10%
But on the other hand it was a 3 bed house in SW16 for less than 60K, so it's swings and roundabouts
With interest rates low, more of your repayments go to reducing loan, so it's not so stupid to pay off or even overpay your mortgage especially against a backdrop of rising rates - those fixed deals run out eventually.
Yes you could put the cash into a longer term or risky investment but even many of those are not exactly returning windfall cash.
Completely agree. I think you may have misunderstood my point - I was commenting on why you WOULDN'T invest borrowed money.
Obviously the rates are different, I was just extrapolating the point as to why you may not want to invest borrowed money.
Disagree, I think most people match their mortgage with the minimum they need and pay down as they can.
Might not be the smartest move but having no mortgage must be a great feeling
I’m in the process of paying mine off this week and yes, it feels great, especially seeing the interest rates rising.
I’m mulling over chopping in my let property and doing the same. Only rented out a year, so we will get the stamp duty back too.
Last edited by Middo; 5th August 2022 at 18:11.
Payed mine off early this year definitely feels like weight off my shoulders even though it's probably more in my head
Money market forecasting 4% BofE interest rates early-ish next year. That will take mortgage rates to around 6%, about the same rate as when I bought my first house in 1999.
Quite a jump from the pandemic mortgage rates on offer at circa 2%.
An increase in mortgage rates from 2% to 6% increases a 25 year repayment mortgage by over 50%, and reduces affordability by 35%.
As house prices are usually correlated to affordability, it appears that there is some significant pain to come, even without factoring in the cost of living crisis which will have further downward pressure.
Around here houses are still selling very quickly. There are loads of new builds going up around town too, virtually doubling the size of the town, most are sold before they are completed. I don't know anyone who has bought one and living in the building site while the rest of the development is finished though, but outside Plympton the new town of Sherford is still racing up. My brother lives in Plympton and knows several people who have bought on the new development, which has a well thought out layout, other than for the fact you cannot drive through because of people parking both sides, despite having two car spaces per dwelling... £750,000 pseudo, grand, Georgian town houses next door to £150,000 terraced 'affordable houses'. The friends who bought haven't been there 6 months and are looking to move out already there are so many problems with the builds - different parts of the development built by different builders but just the same problems of shoddy workmanship showing up, like roof leaks and structural deficiancies showing up.... I wouldn't touch a new build with a barge pole, regardless of the efficiency of heating etc. They are just thrown together.
We are in an old house, built in 1874, it is solid and stays warm in the winter and is cool in the summer. We have a hefty chunk of savings sat in the current accounts, we should move it but don't know what to do with it for the best. I bought a couple of classic motorbikes, but that hasn't even put a dent in it. If house prices come back a bit around here we will buy somewhere cash, we are looking for a piece of land but that has gone stupid with one 2.5 acre paddock fetching £165,000, it was a steep hillside and covered in scrub thorn trees and brambles. That is madness, £66,000 per acre and not for prime building land. We can only assume it is people like us with cash in the bank and nothing else to do with it. We could just it at the Financial Investment folks, but it has to remain there for 6 years otherwise the charges are higher than the return, hence why we have left it, ready to take advantage of any opportunities we see. My bikes have done 20% in less than 6 months, I am being made offers for them, but I am still enjoying them at the moment. They will probably go down, but at least I will have had the enjoyment factor meantime. Give me a couple of years and that itch will have been scratched! You only regret the things you didn't do! Too old to rock n roll, too young to die!
It's the headspace that it creates in the budget - so yes energy costs are increasing but my fixed costs are very very low - no cars, no kids, no mortgage.
I know all the arguments about returns on investment but this is also insurance if I ever lost my well paid job and had to survive on friction of the income.
Maybe because people take the view that life is for living? Of course a balance should be in place but personally I'd never want to be one of those 50 year olds with no mortgage but also never did fancy travel, fancy watches, clothes etc. Of course everyone is different
Prices will continue to rise. Sadly.
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I'm stunned Truss is contemplating reducing SDLT in the mini-budget. Artificially propping up the housing market at a cost to the taxpayer is not the answer, yet this is the second time this Government will have made the same mistake.
It could be argued that SDLT is an unjust tax that's out of date. For many years it only affected expensive properties but as house prices have increased virtually everyone ends up paying. Similar principle with Inheritance Tax, the historical basis and justification for these taxes has been undermined.
It'll be interesting to see what happens with property prices over the next 12-18 months when the reality of higher interest rates coupled with increased cost of living kicks in, whether prices will actually fall in some areas is open to debate but a period of stagnation seems likely.
I've always been of the opinion that SDLT shouldn't exist at all as it's a tax on aspiration, however it does and temporarily reducing it will create all the same sorts of issues that it did last time.
Houses are priced on affordability. People can now afford more, so prices will increase to fill the void SLDT's removal will create.
The money will go to those with bigger houses rather then the government and the real life tax on aspiration remains the same.
The Government has consistently made the housing market worse in a feeble attempt to stave off the inevitable. Temporary SDLT reductions, Help To Buy, Shelving planning/construction reform - all have made things immeasurably worse on top of Brexit and Covid.
The construction lobby must be laughing their collective ass off.
If you're going to touch SDLT at all and need the revenue, just replace it with an annual built land ownership tax at a level that brings in roughly the same money.
I had no idea about this until I spoke to my solicitor today about progressing my house purchase. If this goes ahead it could save me ££££
Indeed it could, or a foolish seller might ask to share in the unexpected "benefit".
They will in the form of reduced stamp duty from the place they are buying.
The person at the end of the chain is not buying anywhere though. Some of them will be foolish enough to want to "share" the SDLT saving their buyer is gaining in what is currently a fragile market and that request can then trickle down the chain as everyone seeks to retain the same net cost of the move. Crazy, but it will happen in some cases, hopefully not yours.
Would this possible ‘saving’ in SD be on sales that ‘complete’ after this Friday?
My daughters been in the middle of a very small chain for what seems like forever - finally the guy she’s buying from has today posted back is signed contract (long distance solicitor). If so she could stand to save a few £ if it happens next week
I wished I could, but it just perpetuates the illusion of the wealth effect, which with an election only 18 mths away is paramount to the incumbent Gov.
SD on property kills social mobility, I wish we could find a fairer system.
SD is terrible for the economy and even worse for the environment. It prevents movement of Labour and amongst other things, creates longer commutes.
I’ve unfortunately had to commute to Bath from Bristol for years. I’ve considered moving a few times but it would be over 35k in SD before any other associated costs.
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